Transcripts For CNBC Power Lunch 20160802

And welcome to power lunch. Im melissa lee. All three major averages at session lows right now. S p 500 down almost 1 . The nasdaq the biggest loser of the three major indices. Were seeing the biggest oneday losses in fact in more than a month. And keeping an eye on the airlines, they are down big being led lower today by delta and thats Airline Index on pace for fifth straight down day. Michelle. Im michelle carusocabrera. Thanks, melissa. Heres what else is happening at this hour. Americans made more and spent more in june. The government reporting a 0. 4 increase in Consumer Spending. Thats the Third Straight monthly increase. Personal income up 0. 2 . The centers for Disease Control awarding 16 million to u. S. States and territories to fight zika. Thats in addition to 25 million in funds at the cdc awarded a month ago. And u. S. Automakers weighing in with disappointing results. All but toyota falling short of expectation. Fiat chrysler did manage a small increase in sales however. Phil lebeau will have more on july auto sales coming up. Brian. Welcome, everybody. Im brian, hi. Your big story once again today is oil, crude oil back below 40 a barrel and it appears once again what is bad for oil is bad for your money. Some though disagree. So the big money question today, do the markets and your investments need oil to go up . Dot com which you jo dom chu here to break down the numbers. We know over the past few weeks weve seen the trading relationship between oil and stocks start to reconnect again. Remember, there was a good while over the course of the past year or so when we saw oil and stocks really trade together. In recent weeks thats broken apart a little more, but now you can see theyre starting again to maybe move to the downside together. So the question is a big one whether or not we will see energy as the big drag. Heres the fundamental story behind it. We do know that energys going to be one of the bigger weights on the overall market here. The reason why is because Energy Sector earnings within the s p theyre bad and theyre getting worse. Heres the part we have to figure out. According to reuters if all remaining Energy Companies report as expected, you can expect to see an 87 drop in profits over the same time last year. As for revenues, down about 25 from the same time. So, again, energy a big drag here. If you look at one of the reasons why this debate is raging, take a look at a couple different viewpoints here. First of all, louie says oil perhaps not the best way to go at this point. He says steer clear of most Energy Stocks since crude oil and prices at the pump are expected to fall further in the coming weeks and months. Hes one of squawk box portfolio contributors. And note held to clients, if crude holds 30 a barrel and were not far from there and estimates in the coming months, i think risk sentiment may actually surprise in august and into the fall on the upside. Bullish. I would say guys, overall, i was emailing with Mohamed Al Arian and he says its becoming harder to. Thats going to be a big theme that plays out in the coming months, guys. Over to you. Dom, thank you very much. Heres the thing, not trying to throw water on it, but i will say this. Over the last 30 days oil is down 20 . The s p 500 is up 2 . The nasdaq is up 5 . So its were down last few days, but its not exactly you call it decoupling . Because most of the first part of the year as oil fell they were together. Whats really kicked in is the performance of technology. Whereas once we had a market built on gains being made in energy and materials, its broadened out a little bit. Weve seen for instance in the past couple weeks apple up almost 11 . Weve seen biotech join in. So theres been a rotation thats been going on thats been broadening the markets here. But were you asking basically have we once again started to move with oil . That the overall market is going to be subject to it . No, im saying while weve been down a few days in a row, its been a pretty good 30 days for stocks. Absolutely. But the first half of the year, right, when oil was going down but as weve said into february the market was down. Then oil started to come up in the spring and the market started come well, well get better insight than me but i will say oil for two years was a debt and Balance Sheet story. Sure. And i think a lot of Balance Sheets have been somewhat cleaned up, not perfectly. So i think the fear of bank panic because of oil has eased. Lets get more on the markets here. As we mentioned the dow on pace for seventh straight day of declines. Thats something that hasnt happened in nearly a year. Bring in russ of blackrock, great to have you with us. Getting to the conversation we were having, oil had been a concern, what has changed in this market in your view if anything. I think a couple things have changed. When you think back to january, it wasnt just oil, it was china, concerns about the Global Economy. And whats different today is people are less worried about a pending recession. Weve seen generally strong u. S. Economic data. And i think at 40 a barrel theres some Comfort Level that oils not going to have the downward pressure on credit markets that had when oil was a 25 a barrel. So this 40, 35 level to me is critical because above that you dont have the risk of contagion into the high yield market. Thats brians point, right . Thats his point. Hes the one that runs the money. When it comes to the dow you play one on tv. When it comes to dow being down seven days in a row, can we point it all to the european banks getting hammered day after day after day and wondering if were returning to one of these awful summer of 2011s . Or is the World Economy in a fundamentally different place that they can have their european banking crisis and were going to be fine. Its not like we ever get to a point where we can put that to the side. I do think the european banks are an issue. Its mostly right now on the italian side. Its not clear thats systemic, but it does suggest europe will be coming back to this interaction between weak growth and weak banks. To that point, michelle, live from milan, i can sense it already because many of these banks are down 70 and 80 in a year, russ. Some of the biggest banks. Is there a contagion transfer mechanism at this point . Exactly. Because we have been shirking off these concerns for an entire year now. And it hasnt made a difference except for the bank stocks. Italy is tough because when you look at who owns the banking debt in italy, theyre Retail Investors. Now this becomes partly a political issue. From an Economic Perspective youd want to bail in those holders of the debt, but that becomes difficult. So contagion mechanism is the fact there could be a bailin of the Retail Investor in europe so therefore thats a cost of pressure on european economies. This create complication most likely scenario some other compromise where youre going to try to avoid that and not inflict too much pain on italian retail investment. To get to brians point, whats the hurdle to getting on a plane to cover it . Does it effect the u. S. Markets . And i dont see much evidence thus far that it does. Record intraday high yesterday, what crisis . I would agree. I think at this point what about a crisis to come . Brewing crisis. Still say crisis. When youve got the s p training over 20 times earnings, vix down at 11 or 12, wherever it reached low a few days ago, you have a little complacency and it doesnt take much to knock the market off for a few days. We love in our business junk statistics, frankly. The dow is down sevenday on pace for a seventh straight decline. Some days the dow is down like six points. Its down but down like 1. 5 in those seven days. But two weeks ago we were all cheering because the s p had set six or seven straight records. Its not oh, boy, almost said something bad there. Its not joe dimaggio street, but do we camp out any of these streets . They mean anything really . You give enough people enough spread sheets still going to come up with statistics. That came close to a career ender right there. What was it . What were you going to say . Tell us. Thats all right. Thats all right. Im literally pounding the table and i smashed michelles hand. Thats all right. Youre always going to find something up for five or six days in a row or down for five or six days in a row. At the end of the day the market had a huge run. The fact weve had a little giveback should not come as a surprise. And the fact six or seven days in a row im not sure makes a difference. But its the dow. It is the dow. Its not the s p. Nasdaqs up 5 . How about this, gold is up, bonds are up, stocks are up, wheres all this money coming from, russ . You dont even need that thing. Were all here. Keep it in, keep it out, never quite sure. Youll hear voices. Yeah. More than normal. Hopefully that doesnt continue when i leave the set. I think theres still a fair amount of money on the sidelines. And gold is a good example. Why are people buying gold . Theyre buying gold for a couple reasons, one of which is if you have an environment where real rates are basically zero if not negative, gold tends to do better. The other reason i think people like gold in the Global Allocation Fund weve got a position in it is the fact that it is a hedge. Go to individual point where credit markets have been on a run, stocks have been on a run, youre in a seasonally weak part of the year and concerns about an election, one of the questions Portfolio Managers are asking themselves is what can i have in the portfolio that will have some diversification benefit when and if we do get that next correction. All right, russ, on that note, were going to leave it there. Thank you. Thank you. We should note that right now we are at session lows. The s p 500 is down by more than 1 , 1. 07 right now. 2147 is your level. As we are hitting session lows on the major markets, u. S. Tenyear treasury yields are at their session lows 1. 51 97 . Theres a bid to safety going on as we speak, ty. All right. Three big u. S. Automakers slumping in the marketplace today after car buyers pumped the brakes just a bit after year of record sales. Are the good times in the Rearview Mirror for the Auto Industry . Or the best of times, should we say. And what impact could that have on the overall economy . Well bring you analysis straight ahead. Plus, email exhaustion. Out of Office Overload. Is your boss hammering you after hours with incessant emails . A new study says yes, and we will explain the impact straight ahead. Discover how a lexus master craftsman turns an ordinary experience into an extraordinary one. Get great offers at the lexus golden opportunity sales event. Lease the 2016 es 350 for 329 a month for 36 months and well make your first months payment. See your lexus dealer. Will your business be ready when growth presents itself . Our new cocktail bitters were doing well, but after one tradeshow, we took off. All i could think about was our deadlines racing towards us. A loan would take too long. We needed money, now. My amex card helped me buy the ingredients to fill the orders. Opportunities dont wait around, so you have to be ready for them. Find out how American Express cards and services can help prepare you for growth at open. Com. Welcome back to power lunch everybody. Im Tyler Mathisen. Investors hitting the brakes on automakers after july sales that werent quite at the pace many expected. Phil lebeau live in chicago with the numbers. Hi, phil. Hi, tyler. I call these lukewarm sales. They werent terrible. Its not like they fell off a cliff, but they were certainly not to the expectations of many on wall street and certainly for investors as well. As you take a look at these sales for july, only one of these automakers which did better than expected that was a decline of 1. 4 . Keep in mind however that when you look at july a couple of things people were focused on. Did we see big boost in incentives . We saw incentives move higher but not as much as expected. Saying the average per vehicle a little over 3,200. Thats up about 60 year over year, but it is down compared to june. Still, when you look at the overall pace of sales it is not expected to do much to help the overall sales pace for the year. In fact, most say july probably came in 17. 4 to 17. 6 million, though recently in the last hour ive seen more people say closer to 17. 4 million. And because its not higher, because its not closer to 18 million, this is what youre seeing with the auto stocks. All of them are under pressure today down anywhere from 3, 4, 5 depending on the automaker. The bottom line is this, guys, its not like people are saying we expect the auto stocks to go way down. But they do not have any confidence right now that these guys are going to see better times over the second half of this year. And thats why theyre selling them. Phil, thank you very much. Lets bring in carl brower, Senior Analyst for kelley blue book. Phil hit it right on the head as usual called it mixed. There were some positive signs. Gm sales up, overall number down because of fleet. Fiat chrysler rose, jeep up, nissan a july record and toyota rav 4 and highlander each rose 19 to best julys. Were car sales weak or just kind of eh . I think eh pretty much is the technical term youd want to use here. Like phil said theres kind of as many strengths as there are weaknesses. We arent seeing excessive inventory. Were seeing sales settle in around 17. 4 million. And thats an awfully high number. A couple years ago any Car Companies and investors would have killed for those kind of numbers. So if we settle in around mid 17s and can hold here for any length of time, these Car Companies are still making a lot of money at that level. So why are we being so sad sack about it . Its like a b student getting an aminus and being frustrated. Actually, i think its more like a student going from cs to bs to aminuses and then not getting to as and holding at aminuses and thinking the momentum suggested wed be at as by now, pluses, its like hes still a lot better than a c. Why are cars the weak spot in most of these Companies Portfolios . Trucks and suvs seem to be doing well, toyota as brian mentioned, but their car sales werent so hot. People love trucks in this country. They really do. Simple as that. Yeah. They love them when they get really good mileage which relatively speaking they get much better mileage than they did even five or ten years ago and much more flexibility. People love the flexibility of an suv. Does the proclivity of americans to buy trucks and for the Companies Thus to manufacture trucks call into question the manufacturers ability to hit the mileage standards that have been set up that i think are basically, you know, their Fleet Average has to hit a certain level. But its hard to hit that Fleet Average if mostly what youre selling is 16, 19mileagallon trucks. It is. And what will help them a little bit is a lot of these sales are going to compact or subcompact suvs that do get 25 to 35 mpg. That helps a little bit, but thats not going to get them to 54 which is what theyre supposed to be at by 2025. So, yes, that will be an interesting battle over the next couple years. Have these Car Companies proven that they can handle a recession . Or are they going to do the same thing they always do which is increase incentives dramatically, start fighting for market share and therefore hurt their profitability . Its a great question. I think theyre better positioned for a recession than ive ever seen them before. That doesnt mean that theyll be, you know, completely unscathed during a recession like any company. But i dont think theyd really hit a brick wall and wed see terrible numbers like we did in the past. I think they can actually manage it much better than usual. I think they may not make the same mistake. Theyll make a different mistake. Its like airlines, builders. They may not make the same mistake but theyll make something different. Thanks, carl. Still ahead, the unprecedented warning from the cdc over the zika outbreak. What you need to know and how it could impact your travel plans. Speaking of which Royal Caribbean shares down big right now nearly 7 . The ceo joins us exclusively in the wake of the earnings report. First though, betting on the future. One entrepreneur with the cutting edge to make it. Kate rogers joins us with that story. Thats right. How one entrepreneur went from selling cutco knives as a teen to running her own sales empire coming up after the break on power lunch. Welcome back to power lunch. Im michelle carusocabrera. Startups can be cut throat, but we found one entrepreneur that has a cutting edge on the competition. Kate rogers with more on a story that must involve knives. Kate, hello. It does involve knives a little bit in the beginning there, chantell waterbury certainly hustled from a young age selling cutco knives and actually helped her launch her business. Be creative, be confident and be you. A direct selling platform for the facebook generation. The social Commerce Company allows merchandisers to set up curated Online Jewelry stores to sell direct between customers keeping between 45 to 50 of the profit. Not like were looking to have somebody necessarily have the confidence coming in. We want to give them confidence. 70 of the companys 10,000plus saleswomen nationwide are under 34 years old working on the platform launched by chantel in 2011, a retail veteran of some 15 years, she knows a thing or two about having selling cutco knives to pay her way through college. She sold 30,000 worth to pay for first years tuition at santa clara university. Not only did i make enough money, not only did i achieve, but gave me the confidence to believe in myself to know i ran a business at such a young age that by the time i was graduating from college and i was in interviews, i was so proud. That hard work ethic stems from a rocky childhood growing up on and off welfare as a kid in california watching her mom struggle to make ends meet. A conversation waterbury had with her mother dying of Breast Cancer gave her the confidence she needed to take the leap and start her own business five years ago. She just said like this isnt the daughter that i know. You know, the daughter that i know was fearless. She wouldnt have been afraid to take that plunge. For whatever reason it was that extra push that i needed. She got to work on a Business Plan and within six months raised 3. 5 million in funding. Today, that numbers grown to more than 37 million. I mean, i feel incredible just because this is something that ive always dreamt of. And to actually see it happening and to be happening so quickly, i mean, its a dream come true. But to be able to build Something Like that and know that im doing what i love, but im actually helping make someone elses life better is the best feeling of all. So as you can see waterbury takes a lot of pride in knowing that her business is likely giving other young women financial independence, the same way that selling those knives did for her so many years ago. And of course for more stories like this one, head to cnbc. Com makeit. Fantastic. Loved it. I love a good entrepreneur story. She definitely hustled and had it within her but the final push from her mom. Sad but inspiring at the same time. Terrific stuff. Thanks, kate. Royal caribbean hitting some rough seas after delivering a weak Third Quarter outlook. Stock now down over 30 this year. We will talk to the ceo about tourism, overseas exposure and zika threat in a power lunch exclusive interview. All aboard, well be right back. More places. N so you can take your business just about anywhere. Plus, our extended range lte reaches twice as far and its 4x better in buldings. Get more done in more places. Switch your business to tmobile work today. Hi everybody. Im sue herera. Heres your cnbc news update at this hour. President Obama Holding a joint News Conference with the Prime Minister of singapore at the white house. But he immediately criticized donald trump saying trump is unfit to be president and called on republicans to repudiate him. This isnt a situation where you have an episodic gaffe. This is daily. And weekly. Where they are distancing themselves from statements hes making. There has to be a point in which you say this is not somebody i can support for president of the united states. July was a deadly month in chicago. 65 people were killed in the windy city. The deadliest july in ten years. This year alone there have been 400 homicides in the city. That compares to 490 for all of last year. Hundreds of mourners gathering in france today for a funeral mass for the elderly priest killed by two islamist extremists. It was organized under tight security and burial was said to be privately held. Fans gathering in tokyo to celebrate starbucks japan 20th anniversary. 200 people lining up at the original store this morning. Despite stiff competition, starbucks boasts about 1200 locations in japan. Im not sure whether that was the price of a latte or not. Thats the cnbc news update this hour. Ty, back to you. Thank you very much. Lets look at what the markets doing at this hour. Stocks are near their session lows. Triple digit decline for the dow as you see off 136 points, 137 at 18267. The s p 500 with about a 1 decline. And nasdaq also down today by about 1. 25 . Oil also lower. Couple of green arrows out there. Mallincrodt. Cdc director out with stark warnings. Heres what he told the gang on squawk box. Its hard to protect yourself from mosquitos, it means putting on deet multiple times a day on all exposed skin, wearing long sleeves, long pants when possible, staying indoors in airconditioned or screen space. Thats not easy to do. And its particularly important in this area. But until were through with mosquito season, anywhere in the u. S. Where this mosquito is present there is a potential risk. And thats why were advising women to protect themselves. Nbc news Kerry Sanders in miami zika hot zone. He filed this report. Hey, guys, im in the wynwood area here in miami, just north of downtown miami. This is ground zero right now for where they believe those mosquitos with zika are. The problem is this is a very transient area for several reasons. First of all, lots of tourists come here. They come here and then they move. And theres a rather large Homeless Population here, which is incredibly transient. So the Health Authorities are concerned as people come here, possibly get bitten by a mosquito and then move somewhere else in south florida, or maybe to another part of the country. Theyre unwittingly carrying the virus with them, another mosquito bites them, picks it up and then its transferred to another person. The real effort is to try to stop those mosquitos dead in their tracks. The problem is the efforts to fog, the insecticide, it appears according to Health Officials these mosquitos are more resistant than expected. So theyre having a really hard time trying to wipe out mosquitos theyre focused on. And remember this is florida. Theyve been battling mosquitos for decades and theyve never won. Back to you. No, they havent. Kerry, thanks. Shares of Royal Caribbean getting crushed today. Theyre down over 6 . And for the year down over 30 . You can see the cruising stocks have been struggling in general. And then today rcl missed on revenue and also lowered guidance for the quarter. Currency issues related to the british pound in the wake of the brexit vote, fuel rates also partially to blame. Here now to talk earnings, zika, oil prices, much, much more, ceo of Royal Caribbean, sir, good to have you here. Thank you. Good to be back. What do you make of the move in the stock today . Is it because of the earnings repoor is it the concerns over zika and the fact were seeing it in miami, for example . I think the authorities have taken an aggressive position visa vee zika, and i think theyll do the right thing. Fortunately, we have not seen that to be a big factor for us. I think the thing people seem to be concerned about today even though we continue to be guiding to a 25 increase in earnings this year is china. People are concerned about china. People think its going to be we weak. And i think that is probably the single biggest factor impacting our shares today. Are they right . China is our strongest market today. It has performed at a very high level consistently. Its down off of the highs of last year. But still if we had more market in china, we would be doing even better. Underline zika though, back to that for one second, are you seeing any cancellations or are you worried about cancellations related to zika . I think weve actually been a little surprised at how little impact weve had from that in terms of calls, in terms of cancellations. It really has not proven so far to be a big factor for us. And i think people are taking the right kind of precautionary steps. So that hopefully wont be too big an issue for us. What percentage of revenue, mr. Fain, its melissa lee here, what percentage of revenue related to cruises embark from miami, were getting an idea of what the worst Case Scenario could be if zika turns out to be a bigger threat than it is today. Melissa, im not sure i know the exact number but i think we have about 20 leaving from miami, maybe a little bit less than that. And as i say, i think people are aware of the issue. People are taking the precaution seriously. And at least so far its been in the news for quite a while now, we have not seen a real impact on our bookings. Richard, Tyler Mathisen here. In some of the commentary there were remarks that said currency headwinds were one of the factors effecting earnings, and another was oil. You would think that oil would help. Is the lower price helping you or hurting you . Well, you know, i think it all depends on your starting point. And they happen to be looking at oil for example from the end of the first quarter. And oil overall is a terrific story. But it is a little bit more expensive today than it was three months ago. Thats a very small impact. We had a onetime impact from foreign exchange. The biggest part of that was pound sterling after the brexit vote. But our business actually did better than we had expected. Are you seeing any from brexit, since you mentioned it, are you seeing any dropoff in customers out of the United Kingdom . Yeah. Another bit of a surprise to us. The brexit weve seen absolutely no impact. If you look at our bookings out of the uk, theyre actually up marginally from before the brexit vote. Now, we do suffer from a foreign exchange. They really do want to leave. Well, i think theyre typical of everybody, they want a good vacation. Sure. We continue to offer that. Did you change prices at all . I mean, are you absorbing the currency risk and thats what we see pairing out in the earnings so the actual english buyer hasnt seen a change in prices and maybe thats why there hasnt been a change in bookings . Well, we always, you know, more than half or almost half of our bookings are coming from outside the united states. And in each market we price in the local currency. Thats the way we manage our business. And thats been very successful for us. And sometimes the currency moves in our favor, as it did in the first quarter. Sometimes it moves against us, as it did in the second. And we manage that over time. But we always price in the local currency because we want them to see us as a domestic operation. Richard, its brian sullivan. My colleagues asked all the smart, deeply inciteful, meaningful questions to investors. I will not do that. I will ask the curious engineering type question. Okay, brian. How big can your ships get . Honestly. Were at 6,000 whatever passengers. Are we at peak size . From an engineering perspective, how much bigger can your ships get . Well, the issue isnt engineering. The issue is we make our ships bigger not because of any other reason other than we have so many things we want to put in them that makes them attractive. And the irony, and obviously you havent taken a cruise, so your real question should have been ive never been on a cruise. Correct. Well, youre right, brian. Your real question should have been how do i book one. Since you didnt ask that question, ill answer it if you do want to know, but since you didnt ask that question, ill say the issue on size, engineering wise they could be bigger. But what we have found is these larger ships offer so much more activities, so many more things for the guests to do that we actually people are more attracted to them than this theory that people who havent cruised so much think smaller is better. Thats not what im saying, richard. Im just curious how big the ships can get because i think theyre pretty cool looking. But do people want the bigger cruise ships . Do they want to go on a cruise with 5,000 of their closest friends . Well, you know, its interesting. The ship that youre referring to is longer than the Empire State Building is tall. And when the Empire State Building was built, everybody said, wow, i would never want to be bigger than that. I remember when the 747s were coming out and people said, oh, the 707 is so much more comfortable, would i want that bigger ship. The truth is the 747s today are more comfortable for the guests, 380s are more comfortable. And peoples satisfaction rate on our larger ships is the highest in the industry. They love it. And they pay for it. Richard, its melissa. Ive actually been on several cruises including the inaugural cruise out of china last year. I met you in the cafe, i dont know if you remember, maybe the only passenger came up to you and identified you on site. But i want to ask you the question that a lot of investors are wondering because you paint a very rosy picture about where youre seeing the growth, you wish there were more markets like china. Fact of the matter is, richard, your stock is down 33 over the past 12 months. The cruise stocks in general are down. Is it terrorism . I mean, what is going on . What can you tell investors, you know, in terms of why they should stick with the stock that has been a loser . Well, you know, melissa, first of all, thank you for your interest. And i do recall that. And i also recall you were enjoying the food in that very large ship. I hope youll take more cruises. I have to say, our ships sorry, our shares had had a big run up. And about a year ago people started getting nervous about a number of things going on, including china. And i think we have to continue to demonstrate through our results, which i think were doing, but i think we just need to keep producing, keep meeting our objectives and keep meeting our guidance, and i think the shares will respect that. In short term we can have we have unfortunately down periods. But over time i think the numbers speak for themselves. And the numbers say were doing a lot better. All right, richard, good to have you on. Thanks for joining us from miami. Are you wearing a lot of mosquito repellant . Thank you again. No, appreciate being here. He didnt want to answer. Good to have you. Thank you. Five times the gross tonnage of the titanic, the harmony of the seas. I wonder if they ever built one the size of manhattan. They keep getting bigger and bigger and i wonder if theres a limit, water depth, bridges thats the issue, ports and bridges. Just like the huge planes that take so long to get on and so long to get off. Yeah, only fly into certain you cant put the ship into the port so you have to dock on a little boat. Right. It takes long. Its a pain in the neck. Have you ever been on a cruise . Yes, with my parents. You spend more time on the ship, you spend more money on the ship, thats better for them. He said you were enjoying food. Because i met him in a restaurant. Did they have a water slide . They didnt have a water slide. Had one of these things and it takes you up like an arm. You can go over the water, over the edge of the boat. One of those, you know, high fancy cruise ship boats that you dont like, brian. I didnt say i didnt like them. Youre skeptical. I get jittery, i dont like crowds and i dont like to be trapped for seven days. Dont want to be confined. Jump off and swing back. Up next, talking prescription drugs, Power Generators and sky miles, yep, its the good, the bad and the ugly in todays trade. Power lunch back in two. Welcome back to power lunch. Im melissa lee. Before the break we told you prescription drugs, Power Generators and sky miles were the good, the bad and the ugly. Shares of good cvs trading higher on better than expected results. Now to the bad Power Generator generac shares down by 5. 7 . And it is downright ugly for the airline investors, delta, jetblue, united, southwest all deep in the red here. Are you suffering from out of Office Overload . Is your boss burying you with sounds like a medical ad. Do you suffer from overload. Only on weekends, tyler. Take this cleanse. If you said youre going to get this segment no matter what i say. Youre not alone. You need a picture of a guy in a motorcycle then getting into a tub. A study says on average we spend eight hours a week on workrelated emails after business hours. That adds, do the math yourself, folks, an extra day to the workweek. Here to take us inside the result is associate professor of management at the beautiful lehigh university. She coauthored the study with William Becker of virginia tech. Thats right. And Samantha Conroy at colorado state. Okay, cool. So are we more stressed because email follows us home . Or do we mind it . Is it just kind of do we expect it now . Well, communication change the nature of the job in the last two decades. Theres no question about it. However, stress is present. And Prior Research also show email is responsible for a lot of job exhaustion, overload, workfamily conflict, et cetera. What we look in this stat is what is the organizational role in this . Interestingly what we find is organizational expectations, those informal norms, even if checking email is not part of your Job Description to do it after hours, if others do it, if you feel peer pressure to do it. Absolutely. And you do that and that of course shapes your behavior. You spend more time checking, monitoring email. But whats important even if you dont spend time on email, this idea that you have to be available really gets to your family life. Right. And then it leads to inability to disconnect. And theres high busch. Youve got an iwatch on now. You are totally plugged in. I am. Check your email if it vibrates. Its really personal. Dont feel you have to check any can i play devils advocate for one second . Sure. Before the mobile phone, i was a local reporter and i sat at my desk some nights until 8 00 or 9 00 praying somebody would call me back at my desk. I used to sit and wait around when they gave me that first blackberry, freedom. It freed you. It was fantastic. It made my life less stressful. Is that just because im a reporter . Maybe a lot of people feel that way. They can stay at the office less time because they can get more work done out of the Office Rather than staying late. An interesting question, depends on nature of the job. If you can, thats great. And also nature of my job allows me flexibility to work whenever i want. I dont remember last vacation when i wouldnt work a day on research, for example. However, there are people who still work from 9 00 to 5 00, and they also check email after hours. So it really adds i think freedom most people have are more chained to the cubicle than we are. We can go travel or whatever. But if youre a 9 00 to 5 00 ironically this segment was an example because we saw your study, our producers reached out to you. We got emails going around. Hours and hours of emails about you. Our producer whos awesome said shes booked. But at 10 30. This is what we do. So let me ask, if im feeling stressed because of the volume of emails. Right. Whats my best way to work against that . Say im not answering emails on saturdays . Thats what my wife does, any pr person who pitches me on a saturday, boom, go to junk. Thats tough. I dont think you can really do that because if you want to really keep your relationship with your boss or be eligible for promotions or whatever your job is, everyone else is doing, you cant really tell me the healthy way. Well, the healthy way is to communicate our findings to your boss and organizations. Our research looks at companies and company culture, right . What were seeing is help your workers to disconnect. So why dont you make formal policies, for example, you can appoi appoint again, this is just an example. It doesnt have to be something really drastic. But appointing a couple of people to answer emails at work and now they say this is your email free day. Or prohibiting emails on weekends. Or other changes that a lot of Companies Overseas are doing and even here there are some taking so basically unless the boss recognizes the problem, you have to live with being fatigued . Bottom line is youre loss. Well, if you want a good job and excel at your job, probably. All right. Liuba, thanks very much. Ill send you an email. Absolutely. 12 00 p. M. And then ill reply all. Im checking my emails. Thank you very much. Dont take it the wrong way. Im deeply skeptical. All those recommendations. Doubling down, wait until you hear what the embattled theranos ceo said about blood testing and her business. Power lunch is back in two. The heirloom tomato. Intenselyflavored. Colorfullydiverse. Beautifullymisshapen. Cultivated for generations, its the unexpected hero of any dish. When you cook with incredible ingredients. You make incredible meals. Fresh ingredients. Stepbysteprecipes. Delivered to your door, for less than 9 a meal. Get 30 off your first delivery blueapron. Com cook. Welcome back to power lunch. Im melissa lee. Embattled theranos ceo elizabeth holmes. Lets bring in cnbcs meg tirrell who was there. Was it as much of a head scratcher than it seemed . It was probably even more of a head scratcher. Thousands of Laboratory Medical professionals came to this conference in philadelphia yesterday waiting to learn about the technology that enabled theranos to test all of these routine blood tests on such a small amount of blood. Thats not what they got to hear about. What we actually heard about was this new machine thats going to be the future of theranos. People wanted her to address her past and she started out her presentation by addressing some of the theranos troubled history. We take full responsibility for our lab operations. And were working diligently to rectify all outstanding issues. And to realize the highest standards of excellence in lab operations. Today, our presentation is foc s focused on introducing key inventions and the associated science and results behind our technologies as distinct from the operations of our clinical laboratories. So that was essentially it. We had these troubles in the past. Today were going to show you this new science. And so after she finished her 45minute presentation on the science under this new machine, which theyre calling the minilab, this is not the edison anymore, a panel of moderators got to ask questions of their own and from the audience. One of those asked, could you even do what you said you could do for so long . Heres how she answered that question. The technology we presented today is the latest version of our miniLab Technology. And all of the capabilities that we presented. What we wanted to do today was introduce the invention, which were pretty excited about in the context of the ability to integrate multiple methods onto a single platform for the first time. We know theres a lot of questions about the past. And in the appropriate forum well address those, but today were hoping to be able to engage on a Scientific Exchange on this platform. We know theres a lot of questions about the past, but essentially saying theyre not going to talk about those today. Were people buying what she was selling . It was a mixture of responses. A lot of people were very frustrated. We didnt get to learn about what had happened with the old technology, what happened to edison. When you come to this new technology, the minilab, what some people were excited about was how they were able to miniaturize all of this Lab Technology into a pretty small box. A black box symbolically. Most people felt like they still werent transparent enough. They didnt evaluate data independently. This minibox tests a small amount of blood, a normal amount of blood . Thats another question. They still say theyre going to do the collection through these nanotainers. However the whole promise was to do a whole panel of tests on just that amount of blood, not several tubes drawn from your vein required now. And right now theyre going one test by one test by one test. So one test per prick . Well, we dont know yet. Theyre getting fda approval one at a time. Theyve already applied for approval of zika test and ebola test. Zika test is it would be the only one from a finger prick, but are we going to have these hundreds of tests from one finger pricks worth of blood. She presented data, internally run data, not independently verified. So were in the same situation with edison. Its a sort of believe me for right now that this thing works. This is more data than they had ever presented before and it makes you dubious because this still wasnt peer reviewed. Right. They say theyre going to give this to other labs to test independently. We havent seen it. Why did they even bother to invite her anymore or to this . They have been inviting her for years to this conference. Why . Shes the draw. Shes a draw. This year. Wanted to hear about this miraculous magical technology. Doesnt hurt the credibility . The credibility of the conference . Yes. They made careful to say at the beginning of the presentation that aacc, this organization was not endorsing theranos. Okay. I spoke with the president of the organization beforehand and she said how can we endorse it, we dont know anything about it. Thanks, meg. Thanks, guys. Still ahead, the battle of the billionaires, but does anybody really care what a bunch of billionaires have to say about who would make a better president . Well debate it when power lunch returns. Whats happening here . This is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Im michelle carusocabrera. Heres whats on the power lunch menu this hour. The read on the latest job market what the latest data is signaling. And the battle of the billionaires, thiel, icahn, back trump, whos message matters most for november . The state of tv one year after the plummet in media stocks. The second hour of power lunch begins right now. Lets get a check on the markets selloff two hours until the closing bell stocks hitting session lows, the dow is down 145 points. Headed for seventh straight day of loss by the way. The s p 500 down below what some consider a key support level of 2155. Nasdaq down about 1 as well. Consumer discretionary, tech and industrials are your biggest drags. Transportation stocks getting hit especially the Airlines Despite the fact, melissa, that oil is down. Thanks, brian, im melissa lee. Oil prices back below 40 a barrel. The numbers on earnings season the good news expected to climb in q2 earnings per share has shrunk again. Q3 on the cusp of going negative and government proposing a new rule to without paying estate and gift taxes. Now to our big story this hour. The real state of the american economy, the jobs report is due out friday. But what is the data really telling us . Steve liesman joins us now. Lots of data. And i want to fold in this issue that melissa began with, its actually brians pet story which is the impact of oil and Lower Oil Prices on the economy. First though as tyler said good news from the consumer this morning. June Consumer Spending rising 0. 3 . Solid gains and durable,s, nondurables and service as well. Ticked down a couple its the third decline in a row and two questions about this. Either consumers run up their savings too high, werent happy with that 6. 2 , or theyre meeting spending needs from savings. Thats more ominous. While business spending has been contracting, it has been the consumer powering growth and the question this friday for big jobs numbers whether consumers will continue to have those jobs and that income to underpin their spending ways. Gas prices are falling. Thats good. But that means fallout in cap x and jobs from the oil patch where oil and gas extractions jobs they are down, folks, 10 compared to a year ago. And accelerating to the downside. But overall take a look at the overall impact, private sector job growth has remained fairly robust growing right about 2 despite the rough patch in the oil patch. With prices falling again at the pump, the economy faces the downside of lost jobs and investment in the oil sector. But the upside of cheaper gas prices for the consumer and more jobs elsewhere in the economy. So it is a distinct give and take. I cant add it up. All you can do is look at getting hit again. You know, the wave comes in and you get hit and now theyre falling again. So guys who thought maybe they had their act together with their debt or their employment levels, their investment levels, they may have to reconsider, brian. You know more about this than i do. 47 is different from 40. Especially some of these places that 45 area was just on the cusp of being profitable. There are 300,000 companies that are involved in the oil and gas business in the united states. Some of them twopeople firms, some of them exxon mobil and theyre in all 50 states. Thats the story we have tried to tell. 300,000 companies all along that supply chain. So when you see a drilling rig go down, its not just the guys manning the drilling rig, its the pipe makers, its the water, its the frac sand companies, so, yeah, theres a lot of Jobs Associated with this loss. And yet there are tens of millions of businesses in the country. And it is by doefinition that ol is an input to the process. It is not an end in ilts otherwise we wouldnt use oil to power the machines. Thats the purpose of it. If oil prices go down, it should be a net benefit. But one thing, brian, you and i have been talking about for two years now one is that it seems like when it came to investment in this country that the oil and gas sector was a much bigger and more significant part than we first thought. Especially after the financial crisis. You know, guys, were going to continue to dig in to this. We have a news alert i understand from phil lebeau. This comes to us from reuters out of southern california. The parents of anton yelchin, the actor killed in june when his Jeep Grand Cherokee slipped into gear, slid back into a fence and pinned him against a fence, crushing him against that fence, they have filed a wrongful death lawsuit against Fiat Chrysler. We dont have particulars in terms of the amount of money that they are seeking. But we do know that they have sued Fiat Chrysler, wrongful death is the case they have filed there. This all stems from Fiat Chrysler recalling more than a million of these Jeep Grand Cherokees earlier this year because the gear shifter when people think its in park may not have been in park. In his case they say, look, he obviously thought it was in park but it was in neutral. And then the vehicle rolled backwards and he was crushed to death. So, again, the parents of anton yelchin, have filed a wrongful death lawsuit against Fiat Chrysler. Phil lebeau, thank you very much. Well follow that developing story. Lets get back to our previous discussion, dig deeper into the job market and bring on head of u. S. Economics at bank of America Merrill lynch and danielle, president of money strong. I guess if you sort of whittle down the discussion steve had just now, danielle, its the economy is actually doing better than perhaps some of the data might indicate. Would you agree with that statement, yes or no . You know, i would have to give a little bit of pushback on that point. You know, in this mornings personal income data we saw that spending was increasing at double the rate of income and that weve seen the saving rate fall to the lowest since october 2015. So while weve seen consumption certainly be a stall worth especially in the latest gdp figures, i think going back to what got the two of you on to the discussion, thats Falling Oil Prices and some of the paychecks Small Business data that came out this morning, there was that big bulls eye in the middle of the country, the south, where jobs are declining and job growth is declining. Again, i think its a huge give and take. And im not so sure that the consumption numbers are lagged and reveal the true state of where Household Spending is headed. Michelle, let me go back to the question of oil prices and whether you think, you know, taking a punch in the nose one time is bad enough. Taking a punch in the nose a second time really can hurt. Do you think if Oil Prices Continue to slide and go down again that we could see a second wave of real distress in some of those 300,000 companies that brian just mentioned . In other words, they could get through it once, but now if you come back and those prices falter again, that puts my Balance Sheet under real stress. That puts my ability to make payroll under real stress. Talk about that. Well, i think it depends on how those companies were preparing for the future. If they were taking low oil prices that we had seen, something along 30 a barrel, and they made their trajectory for investment based off of those numbers, then the current drop in oil prices is probably fairly consistent with what they were assuming. On the contrary, if they were looking for a big rebound oil prices and they prepared for that and invested in that and its not showing through, its going to be more damaging. So my view its probably a little bit more of the former. I think there was a very big shock, oil prices had hovered in low levels for a while. I think theres been a lot of downsizing already. So to me the hope is if gasoline prices are falling it could be more of a net stimulus for the consumer at this point because weve already rationalized the industry in terms of energy production. Danielle, we had a long conversation over the last few years about the price of oil and what it tells us. To steves point, its an input, in theory it should help. But a lot of people started to see it as a measure of the Global Economy and the u. S. Economy in particular. So when the price of oil fell, people started to get worried about the economy. Do we have an answer finally yet to what oil tells us . You know, i really dont think we do. Ill drill down to whats happening here in dallas, texas. We already know that the houston residential and commercial real estate markets have really been hit hard. Just in speaking with some of the locals here while outside of the oil industry the economy here continues to create jobs, high end housing here in dallas is completely hit a wall because i think a lot of the private equity and the banking that backed the oil industry, some of the secondary nonon effects, if you will, of Lower Oil Prices are starting to emanate through other parts of the economy that werent necessarily directly effected with the initial decline that we saw in oil prices that first time around. Steve, ill ask you this question because youre professor. What is the multiplier in terms of that one job in oil and the impact on the economy . The worker at walmart. You know, real estate agent, et cetera. Is there one . Is there a rule of thumb when looking at the oil sector . A really good professor would tell you the answer he knows and explains it well, and a very, very good professor will tell you when he doesnt know and i dont know the answer to the multiplier on oil. Whats your guess . I mean, it would definitely be something in the order, i think, michelle, help me out, in the Auto Industry its like four or five, every auto job is like four or five regular jobs. I should think its along those lines because its heavy machinery and a lot of stuff along there. Michelle, do you have the number . I think it depends on how budget constrained these individuals. So if its people who have lost their job and they were really spending, whatever came in they were putting right into expenditures and its going to be more damaging for the economy. If its people that had some savings and they can smooth through that shock a little bit. So i think theres really not unfortunately a simple answer. It depends on the level that employer in terms of but you have to ask yourself, are you a third world single commodity country or not . And as far as i can tell oil and gas has not achieved the point where it is responsible for the preponderance of growth in the country. Were not exporting a whole lot of it. It has ended up reducing our import bill on oil. So thats helpful. At the same time i think brians been on for a while is this notion its a big part of the marginal growth thats been out there. Bingo, thats it. Only industry growing jobs in 2008 and 2009. But lets remember one of the hallmarks of the u. S. Economy and one way, and im going to say this very firmly, that the bears have had the u. S. Economy wrong is the incredible flexibility in this economy. And whatever you think is happened in washington, that flexibility has not gone away. What that chart shows you when you look at the decline in oil and gas, and the steadiness of u. S. Oil of the u. S. Total job creation is that we have flexibility, were able to absorb a big hit like that and still keep creating jobs. It is a sign of strength of the u. S. Economy. Correct. But i will say this, having done the reporting, when we were down in louisiana, okay, there are 50 or so offshore boat rigs that go out and help the rigs. None of them were working. Zero were working. Yeah. There are 200 or 400 people on every land rig associated with it. But that also trickles into housing, trucking, all those things. Im not saying the economy is not strong elsewhere. Thats not my point. I say if oil collapses, the American Worker gets a tax break, which is huge. No ones discounting that. But that in my reporting just personal experience does not make up for the loss of the big wage job on the oil rig. Brian, if i could jump in here for just a second. Deutsche bank did a great analysis. Initially when some of these job declines were starting to percolate through and they made the simple observation that the jobs that were being lost were paying 70,000, 100,000, 125,000 and these are for workers without college educations. Its not necessarily that the economys not flexible and that a lot of these people have not been able to find alternative employment. Its that they havent been able to find it at the same level of income. Correct. High School Graduate making 125, yeah. Thanks, guys. I think its more than labor. I think the other issue is around productivity. And thats going to be slowing with the drop in oil investment. Good point. Got to go. Michelle, danielle, thank you. Good discussion. Steve, thank you. Thank you. Lets get to the bond market. Rick santelli tracking the action at the cme, rick. Michelle, yes, the curves actually steepening today, its kind of, wow, short maturities long, long higher, a twoday of tens, we popped over the last two days, were giving a little back. Maybe the next catalyst thats a oneweek chart of the jgbs. Yes, it mostly trades by a point but from minus 30 to minus 7, 23 basis point selloff big time. If you look at whats going on in the dollar yen, what happens when rates go up . Well, the dollar goes down and yen goes up. Finally, quickly, a onemonth chart of Investment Grade on barclays, spreads hovering just below 150, 23 billion in corporate supply yesterday, august may be a record forming hersheys and alphabet on tap today. Rick santelli, thank you. Like everyone else in america even billionaires are choosing a side. Some back Hillary Clinton, others support donald trump. Does the backing of billionaires really even matter though . And if it does, whose message will resonate the most . Head to break look at gold just closed highest level in more than two years. Gold is now at its highest settle price since march 17, 2014. [baby talk] [child giggling] child look, ma. No hands. Children i, j, k. [bicycle bell rings] [indistinct chatter] [telephone rings] man hello . [boing] [laughter] man you may kiss the bride. [applause] woman ahh. [indistinct conversation] announcer a full life measured in seats starts with the right ones early on. Car crashes are a leading killer of children 1 to 13. Learn how to prevent deaths and injuries by using the right car seat for your childs age and size. Welcome back to power lunch. While mr. Trump counts on the support of tom bar rak, haroldham, peter thiel, Cnbcs John Harwood with more on the battle of the billionaires and whether these kinds of endorsements matter, john. Tyler, there will be more than 120 million americans who vote in this election. Not too many billionaires, but weve been hearing them both at the conventions and since then increasingly out giving their views on behalf of Hillary Clinton and donald trump. Just take a listen. Is there any bigger jag off in the world than donald trump . When donald trump asked us to make America Great again, hes not suggesting a return to the past. Hes running to lead us back to that bright future. Tonight, i urge all of my fellow americans to stand up and vote for donald trump. It is a choice between who is better to lead our country right now. Better for our economy. Better for our security. Better for our freedom. And better for our future. There is no doubt in my mind that Hillary Clinton is the right choice this november. Hillary clinton would eliminate fossil fuel development in america. She would kill jobs, drive up gasoline prices and increase oil imports from her enemies. Have you no sense of decency, sir . I ask donald trump, have you no sense of decency, sir . And im here because donald trump is one of my closest friends for 40 years. Now, donald trump could use those billionaires if they contributed money to his campaign. Hillary clintons raised a lot more and spending a lot more on Television Ads than he is. On the other hand hillarys billionaires have more public cachet when you talk about people like oprah, Warren Buffett and mike bloomberg, especially bloomberg because he can help her appeal to fellow republicans. Of course he was elected as the republican mayor of new york city. Yes, he was. Three times. Thank you, john. So which billionaire endorsement carries the most clout with voters . Lets hear from informal trump advisor and cnbc senior contributor larry kudlow along with eric dezenhal. Eric, im going to start with you. Does anybody really care in america what these people say . And does it depend on who the candidate is . Trump gets a billionaire endorsement, i think that actually helps his reputation. And i wonder with Hillary Clinton if it doesnt hurt her. There is one word that only a billionaire can call donald trump that is so hateful, so vial vile to donald trump that would send him over the edge. Millionaire. That is millionaire. Because essential to his identity is he is a billionaire. And i think where billionaires matter is in the context of being billionaires. I dont think people are looking toward Warren Buffett or anyone else as citizens. I think where billionaires have authority is as billionaires. I had someone in that financial category say to me recently, the thing they have against trump is not the things that he says, its that they dont view him as successful. And i think that that has authority. But i dont think that the American Public is sitting and listening but eric, i was just at the dnc. And the people there alt the dnc, the Democratic National convention who hate Hillary Clinton, think she is a corporatist, think she is in bed with people who have a lot of money. And this is one of their core criticisms of her. I wonder if Warren Buffett standing up there endorsing her only proves to them what they already think about her. Well, but i think that you have a point there that where a billionaire could matter is confirming existing prejudices. I think that if you are a donald trump supporter, and you listen to Warren Buffett demanding that he give out his taxes, that simply reinforces the fact that you like that donald trump doesnt listen to people like Warren Buffett. That is an area where it can have effect. The core strength trump has with a lot of voters is the idea that he is a great business success. If that is impugned by other billionaires, it could have an impact. Okay. Larry. I basically agree with that. Thats part of his allure. And middle income people who are waging this populous war respect him for being a businessman. They dont know who these other people are, these billionaires. Nobody knows who they are. I dont think anybody really cares. Bloomberg, you know, mike bloomberg, i admire him a lot. Hes been a republican, hes been a democrat, hes been an independent. He gave such a nasty personalized speech, if anybody watched it probably helped trump. I mean, it was really worst night for bloom than ive ever seen. But the last point i want to make is i believe message matters more than money. And in fact i believe money follows message. So people who have a clear message, like trump is a tax cutter, hillary is a tax increaser. Which side are you on . If youre a tax increaser, if you hate the top 1 , youre going to go and love hillary. On the other hand if you think youre getting taxed too much and you dont have enough after tax to take home pay, youre going to like trump. My point is look at all these primaries for example. The people with the big war chests did not necessarily win at all. No, if money mattered in politics, mitt romney would be president and jeb bush would have been the nominee. But Bernie Sanders let me raise a question how money could matter. Sanders didnt have a wooden nickel. I want to make that case. And he blossomed into a very Large Campaign that attracted a lot of grassroots money. Thats all i want to say. Joe biden was for years the whole lowest net worth senator in the u. S. Senate. Is he still . Hes not im sorry. He wont be after he leaves office. Let me leave this one out there in a way that money could effect the message, and thats mr. Trumps tax returns. We may learn a lot about his money, his wealth, what he does with it, who he supports in charitable ways, if he releases his tax returns. How critical is that . Do you think hell do it . Do you as an advisor of his urge him to do it . Look, im just get everything out. Thats always been my philosophy. I dont think it really matters. I dont think the average person cares very much about tax returns. Do you think i just dont think it matters. Did you think when romney released his that it mattered . Maybe for a couple days. I will say this about money though, going back 40 years barack obama wound up with much, much more money in the spring and summer than romney did, and barack obama went on tv with really tough negative ads on romney, you know, because hes a businessman, because he laid people off. At one point they accused romney of killing people. Romney didnt have the spare cash to respond to that. And i think it hurt the Romney Campaign a lot. Now, this year hillarys up there with, i dont know what shes got 60, 70, 80 million, doesnt seem to have helped her at all. More. So you would urge mr. Trump to release tax returns as soon as possible . Yeah, im for transparency. Absolutely. I dont know what youre going to learn, by the way. I think his Financial Statement is probably more revealing. Yeah. And i think it depends what these things say. If Donald Trumps Financial Statements or tax returns show that he is not that rich, he will be attacked for not being rich. He will in turn lose his mind. And i think that one of the key strategies of the democrats is to get him to lose his mind in conjunction with tv ads showing people who were not paid by him. And so if we get back to message, its not so much the message of his tax returns, its a message that will cause him to become unglued and it will be a message of average people saying they were not paid. It will not be because Oprah Winfrey or George Clooney or tom stire opines on trumps qualificatio qualifications. Heres a point i want to make too. Regarding hillarys i wrote this in our cnbc. Com column, her Convention Speech in some sense was delivered quite well. Heres her take. She said the economy is not performing well because democracy is not performing well. And the reason the democracy is not performing well is all because of the corporate case united versus whoever citizens united. That was her whole case. Thats remarkable. And citizens united, by the way, discloses everything, okay. And thats her defense of the poor economy. Its a very bad defense. And thats a case where money is absolutely misleading. And for her to blame it on citizens united, make no sense at all. I dont know where she thinks shes going with that. Again, the average person has no sense of what the heck thats all about. None. Zero. All right. Larry, thanks so much. Pleasure. Eric, good to have you. Larry of course informal advisor to donald trump. All right. Up next, the oil close. Were back in two minutes. Can a toothpaste do everything well . This clean was like pow. It felt like i had just gone to the dentist. It just kind of like, wiped everything clean. My teeth are glowing. They are so white. Crest [hd]. 6x cleaning, 6x whitening. And at two weeks superior sensitivity relief to the leading sensitivity toothpaste. I actually really like the two steps crest [hd]. Step 1 cleans, step 2 whitens. Its the whole package. No ones done this. Crest healthy, beautiful smiles for life. Hello everyone. Im sue herera and here is your cnbc news update at this hour. President obama and singapores Prime Minister sitting down for a oneonone meeting at the white house. They discussed the proposed Transpacific Partnership trade deal. A bit later president obama talked about restoring stability in libya. It is in Americas National security interests in our fight against isil to make sure that theyre able to finish the job. And so were working in partnership with them to assure that isil does not get a stronghold in libya. A syrian rescue Service Operating in rebelheld territory said a helicopter dropped containers of toxic gas overnight on a town near where a Russian Military chopper was shot down hours earlier. It said 33 people were effected by the gas. An italian ship carrying 381 migrants docked in a sicilian port. Today migrants were rescued on sunday night in a series of operations off the coast of libya. Back here at home instagram taking on snapchat by rolling out a new feature to make it easier for users to sum up their day. Post videos or photos that capture their day and disappear after 24 hours. Just in case you forgot what you did. Thats the news update at this hour. Power lunch back in two minutes time. Businesses need the agility to do one thing another. Only at t has the network, people, and partners to help companies be. Local global. Open secure. Because no one knows like at t. Welcome back to power lunch. Im michelle carusocabrera. We have less than an hour and a half to go before the closing bell. Dow industrials lower by 116 points, s p lower by 16 and nasdaq lower by 53 points. In terms of percentages it is the worst performer lower by more than 1 . Pfizer, apple, dupont and Goldman Sachs are the biggest drags on the dow right now. Oil market just closing for the day. Lets get to Jackie Deangelis at the nymex. Good afternoon, michelle. Thats right. Close under 40 everyone was looking for. Fourmonth low nearly so for oil prices. Interesting because we started out positive for the session. That was because the weaker dollar that we saw. But when equities started to decline more steeply, so did crude oil. That correlation is alive and well. Back to you. Jackie, thank you very much. Were half an hour away from the closing bell live from atlanta. Kelly evans is there for us right now with the ceo of Southern Company. Kelly, take it away. Hey, thank you so much. Im sitting here with tom fanning of Southern Company as a storm rolls in. No kidding. This is a little like the wizard of oz and dorothy. Im the strawman, maybe, i dont know. Storms are sometimes Utility Company you have to deal with all the time, but i want to start off with you today and ask you about teslas recent agreement to buy solarcity. They say theyre creating the green grid of the future. What do you as a utility executive say . I dont get it. It doesnt make any sense at all to me. Look, there is absolutely a change in what has traditionally been our business model, to make, move and sell energy up to a meter. And we know that because technology is enabling it and customers are requiring it, were going to move this notion of make, move and sell to the customer premise. This is some of the thinking behind what i think tesla and, you know, solarcity are trying to do. But i tend to think of it not so much as the segment of rooftop solar but rather distributed infrastructure. Whether its a microgrid or Storage Panel or storage device or electric charging station, all of that is going to the other side of the customer premise. And thats where were going to have to play offense. And how is that going to look for you guys as you start to do that . So we just acquired a Company Called power secure. What they do is specialize particularly in kind of large users, commercial and industrial users, and theyre having great success. That said, Utility Companies for all this change that might be coming are trading at incredible valuations these days. And we should. Well, im sure you think that. For a lot of people worried about what they see as maybe a bubble. Everyone is piling in. They like your yield. They like the stability. Yeah, sure. On some level as you see the valuation rise does it worry its planting seeds for future problems if theres a turn and run for the exits . Kelly, i dont think so. If youre responsible about your Balance Sheet along the way, you dont lever up too much, where you dont have to raise equity in the future, youre probably going to be okay. And the idea is remember Southern Company in fact was the lowest beta in the s p 500 last year. Theres always going to be a place for a good yield, moderate risk, attractive return in your portfolio. Weve talked about some of the changes in the utility space. You guys are always trying to push new technologies. You bet. In coal in particular has come up on the campaign trail with Hillary Clinton sounding like she was going to try to keep shutting that down and backtracking a little bit in her more recent comments. Can coal be part of a 21st century cleaner Energy Future . Sure, it can. In fact, secretary moniz, i think is the best weve ever had and i traveled to istanbul interesting enough to pitch this idea to eastern europe, china, places like that. The rest of the world is going to continue to use coal. As carbon as i think it is an important issue, were going to have to find ways to use it responsibly. The technology we developed and continue to deploy is going to be i think a way forward. But remember its going to take all the above. It truly will. Were the only company in america doing all the above. Building new nuclear, 21st century coal, natural gas infrastructure, renewables, energy efficiency, we need it all. Nuclear another area thats been challenged. But well see again if all of these become part of the going forward. Tom, thanks for joining us out here. Great being with you. Stay dry if there is a storm coming down. Thats tom fanning, ceo of Southern Company. Here in atlanta be sure to stay tuned to closing bell this afternoon. Well be joined by some other big names in business like home depot ceo, atlanta fed president and many, many more, guys, we have a lot on tap. Back over to you. Kelly, well all be watching on closing bell. Its been one year, folks, since disney stock tumbled on a warning about espn from the ceo bob igor. Where does the bundle stand today . Thats coming up on power lunch. E, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. It has been one year since disney ceo bob iger raised worries about skinny bundled sending disney shares lower, hasnt recovered since. Media Company Still have concerns over that skinny bundle. Julia boorstin joins us now with the story. Julia. Hey, melissa. Well, a year later the tv business doesnt look as bad as many feared. Take discovery whose stock is up nearly 7 today after reporting better than expected earnings on the performance of its u. S. Cable networks in raising its earnings outlook. Ceo david zazlov saying hes focused on building content apps in europe to sell to consumers outside the tv bundle. Weve seen an explosion of options outside traditional tv, skinny bundles from sling tv and verizons custom tv, hulu even working on own live tv skinny bundle. Media giants over the top apps seem to be gaining traction. Cbs saying its all access and showtime ott apps are ahead of schedule with 2 million subscribers. While cord cutting is still happening, its slowing. With cable subscriptions falling just 0. 8 in the first quarter, thats a third the rate of a year earlier according to Moffit Nathanson and things looking better in q2. Comcast posted best Second Quarter in a decade in terms of subscribers losses. And discovery as well as cbs and nbc have given a bullish outlook for advertising, upfront prices and return of digital ad dollars to tv. Well have to see what disney says when it reports its earnings a week from today. Tyler. Julia, thank you. Lets bring in Andy Hargraves at Pacific Crest securities to talk more about the changing face of how we watch and what we watch and when we watch. Andy, welcome, good to have you with us. Thanks for having me. Who has the most to gain and the most to lose from the Way Television is changing . Is it the people that own the channels . Is it the people that own the distribution, like comcast, at t . Who . Uhhuh. Well, i think the people in the middle have the most probably to lose and potentially the most to gain. If were thinking about sort of the major disruptive factor here being the internet, the overall structure of the internet distribution business generally doesnt have a middleman, quite frankly. You just go direct to the consumer. Or theres a distribution layer that sort of handles personalization and customization. But you do have to have a way to get connected, whether its through a cable or a cellular signal. Yeah. For sure. And so if youre looking at the cable providers, you know, theyre insulated from the change to a certain extent because the broadband business. It was a year ago when bob iger really freaked everybody out when he talked about some day espn could be over the top and that meant the great unbundling was coming. And people started to discount it in like it was going to happen right awachlt. Yeah. Just now we hear an announcement that thats possible. Is that happening faster than you thought . Slower than you thought . Right on schedule . You know, probably a little bit slower than people feared, at least, going back a year ago. You know, to us the giant unbundling, whatever you want to call it was never really super likely to happen just because of the way the Ownership Structure in the industry is. And quite frankly people like the bundle. People Love Television in this country. And i dont think they want less. And i dont think they want it transactionally. But having said that ive been surprised at how much its held together. And how poorly relatively speaking some of andy, im sorry to interrupt. Were going to go. We have some news here lets get to seema mody for a news alert on biogen which is spiking right now. We are looking at shares of biogen halted on volatility. Dow jones quoting sources saying biogen has drawn takeover interest from rival drug makers allergan and merck. So potentially another health care m a may be on the horizon here. According to the support communications are reportedly informal and preliminary. But, again, were keeping a very close eye on shares of biogen, allergan and merck. For now, just let you know cnbc has reached out to biogen, well let you know when we hear back. Potential suitors allergan as well as merck, this of course comes a day after the ibb, the biotech etf hit a sixmonth high. So weve seen a recovery in biotech shares moving a bit higher and a lot of analysts are saying what we needed was the next leg of m a activity. Consolidation. Consolidation. Gilead has billions of dollars on its Balance Sheet and this could be a sniff of it. Weve already seen so much within the sector. So much. So much of it related to being moved overseas to the uk. Which the pfizer ceo on todays Conference Call says does not expect to happen anymore. Thats off the table. Puts the bad guy by politics for sure, but not surprising to see this happen. To a company like merck that can certainly needs to replace. Needs to buy growth. Right, the pipeline. Again, biogen shares spiking on these reports from dow jones in case youre just tuning in that allergan and merck have informally sounded out the company as a potential takeout target. You see the intraday shares of merck . If potentially merck is a buyer, historically when you see any kind of m a deal, youll see the company being acquired should rise and the company doing the acquiring tends to fall because of the arbitrage play, but look at merck intraday. If this were true, its clear a lot of investors like the idea at least. Absolutely. Thank you, seema. And of course our thanks to Andy Hargreaves for joining us. Actually, biogen has just resumed trading. We understand. It was halted not for news pending but because of volatility. At one point in the session on the back of these headlines i noticed biogen shares spike as much as 10 . So were taking a look right now at the trade and it has reopened up better than 7 . I believe this would be the biggest biotech deal of all time if it was done. Not pharma. Likely. Remember pfizer was trying to buy allergan. So that would have been over 100 billion. Well, the market cap is 68 billion, so whatever the premium is on top of that. Call it 30 sort of an average. The market cap of biogen is 68 billion . Yeah, 68 billion. So this would be a big acquisition here. The shares have reopened after being halted for volatility based on these dow jones headlines. And the stock is trading higher by 7. 5 . It would be a huge deal. Yes, massive. It would be a transformative thing for the entire these two sectors for sure. Absolutely. Well continue following the story. We should note ibb were watching that. It is now higher by 0. 07 , so lifting the sector at this hour. Much more power lunch right after this. Todd spaletto, president of the north face, we are working on the prototype to match customers to gear. Watson, lets give it a try. Say its midjune and im backpacking in yosemite. Of our 353 jackets, i can recommend nine. Watson, what if it rains . There is just a 3 chance of rain, so i recommend the breathable stretch fleece fuse form dolomiti jacket. A Perfect Choice watson. No wonder our Customer Loyalty numbers keep climbing. I believe we can do even better. I like the way you think. Dow jones reported that biogen has takeover and interest may lead to nowhere and sent the shares higher after briefly being halted for volatility. At one point, the stock was spiked as high as 10 on this news. But of course, were taking a look at michelle pointed out at the the shares of the potential acquirers. Theyre not doing so badly considering they could be shelling out more than 68 billion. Thats biogens market cap. See merck move higher on this suggests shelling out the money the investors like the idea. Absolutely. You know whens interesting about buy qiogebiogen . It has a long and not unblemished history. They sort of put themselves up for sale and then couldnt find a buyer. Yeah. Looking through iers ago. Looking through headlines, as recekrrecently as july, there w analysts speculating the company to be in play when you have that much, that much change going on in csuite and open it if you were an acquisition . Of course, this is just the day after biogen had some positive news and phase three end result for the spinal Muscular Atrophy drug with ionis form suit call and the stock doing well yesterday on top of an overall good day for bio tech and good six months after basically being clobbered with the ibb sitting close to sixmonth highs right now and watching today, it is now trading higher on this news, sort of raises the hope that perhaps other companies are, in fact, in play. Lets get to meg tirrell on the phone with more on the developing tori. Meg . Melissa, biogen is a speculated takeover target despite the size for some number of months. Of course when the ceo announced the retirement, that stirred up even more speculation that the company may be in play. Allergan is suspected potential suitor since the deal with pfizer fell through and of course the clearance to close that deal to sell the generic for 40 billion and definitely cash to spend. The ceo is known as a deal ma r maker. They have experience in the biogen biggest pipeline product potentially. Merck, which is the other named potential buyer, all in alzheimers. Their product in the pipeline is more under the radar than biogen and theyre also in that space. This obviously would be a huge acquisition. We did talk with george announcing the retirementaying it didnt make sense the speculation just because he was leaving the company was now in play. Clearly, it looks like there might be something going on there, melissa. Is this sector still in the radar . Remember the Hillary Clinton fweet at one point . I can never forget the Hillary Clinton tweet. This company definitely still in the spotlight. Not a lot of change coming to drug prices. Depends on how popular it is to talk about that issue. For the candidates and still drug prices are considered high. And that definitely is still a political sort of punching bag. Meg, i know youre not a stock analyst but in terms of reaction for the potential acquiring stocks, merck sharyls are down just a fractional percent. Allergan shares down by 1. 2 . Can we read into that at all . You mentioned Brent Sanders is a deal maker. Could he be overpaying in terms of another deal . People may be concerned either party would pay. The perception of biogen is the pipeline is incredibly risky and people thought that buy joe general needs to do its own deals to balance out that risk in its pipeline so coming to bio tech, seeing a high risk project you can see a potentially high price tag associated with that and may not necessarily please everybody when youre thinking about acquiring the company. What is the most promising drug . Do you happen to know . Thats a fantastic question. Well, yesterday, biogen presented reported phase three data from a study in spinal Muscular Atrophy and pleased a lot of people and came earlier than people expected and the study was positive and looks really great. Alzheimers drug is a big option in the pipeline. That works by trying to clear the plaque in the brain. We shouldnt get data for a couple of years. Aducadumam. Is that the name . Meg, we are going to leave it there for right now. Thank you for phoning in. Thank you. Want to get on the phone to make calls on the story. Sharyls higher by 8. 5 . Hi, everybody. Welcome back. We have some breaking news that concerns new York City Police commissioner bill bratton going to retire in september and then on the retirement going to teneo, an Advisory Firm focusing on risk, specifically identifying different risks, advising clients on basically identification, prevention and response to inherent risks for large companies. He will join in september. All right. Back to closing bell. All right. Thanks so much, sue. Well continue to track this story. Biogen receiving takeover interest of merck and allergan. The stock soaring. S p says it could be one of the Biggest Health care deals in m and an ever. Thank you for watching power lunch. Closing bell starts right now. 3 00 in the morning or 8 00 in the morning . Welcome to closing bell, everybody were live from the Metro Atlanta chamber. Im kelly evans and welcome to atlanta. Theyll join us coming up. Very big on my ipod. Im Bill Griffeth here at the new york stock exchange. Today the dow under some pressure. The whole stock market down for a seventh straight day. Pfizer and apple are the biggest